A Hong Kong resident since 1991, former investment banker David Webb retired in 1998 to focus on his investments in HK-listed small-caps and establish Webb-site.com, a non-profit platform for better corporate and economic governance in Hong Kong, which now has over 19,000 subscribers to its free newsletter. He has been a member of Hong Kongís Takeovers and Mergers Panel since 2001, and was an elected independent director of Hong Kong Exchanges and Clearing Ltd from 2003 to 2008 when he resigned over corporate governance issues. He was a best-selling author of games and books for the first generation of home computers. He is an Oxford maths graduate, a member of the World Economic Forumís Young Global Leaders, and former Chairman of Hong Kong Mensa. == == ==

(Wiki-Profile):

David Michael Webb (born 29 August 1965 in London, England), usually known as David Webb, is a well-known activist and share market analyst in Hong Kong. He is a retired Investment Banker, and now devotes much of his time to advocating solutions for better corporate and economic governance in Hong Kong. He is also a significant investor in smaller companies listed on the Hong Kong Stock Exchange, and is frequently called upon by the media to comment on all matters relating to corporate and economic governance.

BiographyWebb graduated in Mathematics from Exeter College, Oxford in 1986. From 1981 to 1986 he was also an author of books and games for early home computers. After graduation he became an investment banker in London. He moved to Hong Kong in 1991. He retired from Investment Banking in 1998, and now lobbies extensively for increased transparency and public accountability of directors of public companies as well as for the Government of Hong Kong[1].

Webb is currently a member of the Hong Kong Securities and Futures Commission's Takeover and Mergers Panel.

ActivismHe uses his eponymous: http://webb-site.com - as his official mouthpiece on all matters commercial and political.

He has purchased shares in all the companies which form the Hang Seng Index, and demands formal votes to resolutions which he judges detrimental to the interests of minority shareholders during the annual general meeting of public listed companies. To force real votes, Webb launched "Project Poll" to push for formal votes on all proposals at annual meetings of Hang Seng index constituent companies; he initiated Project Vampire, to block resolutions that allow for bypassing of pre-emption of rights issues and massive share dilutions.[1]

Webb is also seen as a bit of a political activist: in December 2005, he advocated dramatic widening the electorate of the functional constituencies, arguing that professionals in fields such as bankers and stockbrokers should get to elect their own representatives.[2] At present, only accountants, lawyers, doctors and teachers are able to exercise that right[2]; stockbrokers are represented by a convicted fraudster,[3] whilst the banking seat has only been contested once in 20 years.[2]

Interests:Trading and investing in stocks and commodities. Writing articles on related subjects, while building this website. I am interested in creating ways for communities

Posted 19 December 2010 - 07:00 AM

Christmas Share Tip

From 1999 to 2008, Webb made an annual Christmas share tip where he recommends a single undervalued but well-run company. His picks are believed to have strongly influenced the price of selected stocks.[13] However, The Standard[14] criticised Webb after reporting that he himself owned holdings in his own Christmas share tip (which he has always disclosed), in one case giving himself almost a 40% unrealised profit on his holdings the following day after the tip was published. In December 2009, he announced an end to the "Christmas Pick" after a 10-year run in which they returned a cumulative 1118%, compared with an 87% return in the Hang Seng Index over that period.[15], saying that the success of the picks "has become something of a distraction" to the main goal of raising the standards of Hong Kong's corporate and economic governance.

Webb was named in CFO Magazine Global 100, as a "Gadfly" in 2002.[16] == == ==

Last year's Pick - from Dec. 2009

Last year's pick was Alco Holdings Limited (Alco, 0328): updatexx

Alco is a maker of consumer electronics, including portable DVD players, flat panel TVs, iPod/iPhone-ready audio systems and set-top boxes. Well if you joined us, and became an "Alco-holic", then you did well. We picked it at $1.21. It reached a daily low of $1.03 on 20-Mar-09 (so you had the opportunity to get it even cheaper than when we picked it), and it closed yesterday at $2.99. It also paid dividends of $0.23, representing a dividend yield of 19.0% on the pick price. So overall, our pick gained 166.1% for the year, compared with a 42.3% total return on the HSI (dividends reinvested).

As we wrote in last year's article:

"in our fishing ground of small-caps, valuations are at least as cheap as in 1998. We are spoilt for choice, with some companies trading at close to their net cash, at steep discounts to net asset value, with consistent dividends yielding in the teens, and with P/Es below 4. Indeed, your editor's entire portfolio is tonight on a trailing 12-month P/E of 3.67 and a price/book of 0.41. The metaphoric glass is not half-empty, it is one-third full. If you understand the businesses you are investing in, and if you trust the management, then you probably won't get such attractive valuations for another 10 years. So making our 2008 Christmas Pick has been a difficult choice with so many deserving stocks to choose from."

As a consequence, we made two other "honourable mentions", Fujikon Industrial Holdings Ltd (0927), which was our 2005 pick, and optical frames maker Sun Hing Vision Group Holdings Ltd (0125). Including dividends, Fujikon returned 57.8%, and Sun Hing Vision did even better than Alco, gaining 190.8%. All 3 stocks beat the Hang Seng Index.

Your editor, David Webb, still holds over 5% of Alco, over 7% of Fujikon, and over 7% of Sun Hing Vision (which we increased through the 6% disclosure threshold on 4-May-09 at $1.60 and through the 7% threshold on 28-Aug-09 at $2.765).

The 10-year historyWhat a decade this has been! Our pick has made money in 8 out of 10 years, out-performing the total return on the Hang Seng Index 8 years out of 10. Here's the track record:

What this table shows is that if you put $1,000 into the first pick, and rotated into the next one each year, you would have made 1,118.1% and would have about $12,181 by now, a compound average gain of 28.4% per year. By comparison, if you invested the same amount in the Hang Seng Index 10 years ago, and reinvested the dividends, you would now have about $1,866, a compound average gain of 6.4% per year. So our picks have out-performed the index by 552.8% over 10 years. Both the stock and index calculations exclude transaction costs

Interests:Trading and investing in stocks and commodities. Writing articles on related subjects, while building this website. I am interested in creating ways for communities

Posted 19 December 2010 - 07:11 AM

David Webb's own investments

As a private investor, Mr. Webb doesn't have his returns audited. The numbers he provides, however, are impressive. He says if his portfolio were converted into a hypothetical mutual fund without a management fee, it would have gained 1,025% over the 10 years ended Dec. 31, versus a 78.6% return on the Hang Seng Index, though his performance was much better in the first half of the decade, he says. He is up 13.7% this year, while the Hang Seng Index is down 4.6%.

Mr. Webb's best investment, he says, was Techtronic Industries Co. In 1999, he started buying the power-tools and appliances company at 60 Hong Kong cents (about eight U.S. cents) a share, adjusting for a stock split. Eventually the small-cap stock rose to more than HK$20 a share in 2005. Mr. Webb finished selling the stock in 2007 and no longer owns it because he says there is a herding effect that tends to push prices up as a stock gets "discovered" by bank analysts and funds. He prefers to rotate out of those stocks and back into other stocks he finds undervalued.

Asked about his take on the market today, Mr. Webb says he believes the Hang Seng Index will end the year "significantly lower" as interest rates rise, China's property bubble deflates, and banks' balance sheets see more bad loans. He says the three largest Chinese state banks, which make up 38.6% of the Hang Seng Index's weighting, will face huge loan losses over the next three years because of the lending splurge during the financial crisis.

As part of Beijing's banking reforms ahead of listings, the government "cleared out the bad loans, but not the bad lenders," Mr. Webb says.

Another stock he is down on is Internet company Tencent Holdings Ltd., which he calls the most overvalued stock in the Hang Seng Index excluding the Chinese banks, with a price-to-book ratio over 21, a trailing price-to-earnings ratio around 50 times, and a dividend yield of just 0.24%.

"I don't think their business model is as sustainable as the market seems to think," says Mr. Webb, who previously worked as an investment banker. "Perhaps that's why they are hoarding cash."

So far, Mr. Webb says he has no plans to manage other people's money. "I enjoy my life as it is, with the freedom to spend as much time as I want on pro bono activities and family," Mr. Webb says. "A fiduciary duty to shareholders would change that."

(And from last year):As a consequence, we made two other "honourable mentions", Fujikon Industrial Holdings Ltd (0927), which was our 2005 pick, and optical frames maker Sun Hing Vision Group Holdings Ltd (0125). Including dividends, Fujikon returned 57.8%, and Sun Hing Vision did even better than Alco, gaining 190.8%. All 3 stocks beat the Hang Seng Index.

The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

EXCERPTSWebb points out that he has rigorously campaigned for Hong Kong-listed companies to announce their financial results on a quarterly basis.

He argues that Hong Kong may be a fast-paced financial capital of the region, but when it comes to listed companies reporting their quarterly performance, the city still lags behind the mainland and Singapore in terms of regulation. It is common for retail and institutional investors to wait until the end of April to find out what happened in the year ending the previous December - a long time, especially if one is an institutional investor seeking to gauge and understand the performance of the company in the coming year. "What we need is clear-cut reporting from the listed companies, including numbers we can trust," Webb says.

Perhaps it is unfortunate timing for Hong Kong, but Webb says that sympathy for companies will be in short supply because political pressure had blocked earlier efforts to upgrade reporting practices and listing standards in 2002. He took up the cudgels again last year, but the issue was mired in a bureaucratic muddle and has now been relegated to a long-term-goal category.

One explanation for the delayed response by the government to the proposed changes could be to protect wealth at a time when many companies face a troubled future because of the global economic crisis.

The activist warns that Hong Kong is in real danger of being sidelined as just another "mainland commercial city", especially since the central government has made it clear that it will develop Shanghai to become its international finance capital in the next 10 years.

"If we don't raise our competitive standard and establish these rules, then there is no way for a foreign multinational to choose Hong Kong. The SAR would lose it pre-eminent position as the gateway to China," he warns.

All Hong Kong will be left with in terms of financial services, he argues, will be asset management and private banking - two areas where Singapore is already chipping away at Hong Kong's market lead.

The discussion returns to minority shareholders' rights and the stunning verdict of the Court of Appeal that forced Richard Li and China Unicom (SEHK: 0762, announcements, news) to abandon the PCCW privatisation bid.

Though Webb is modest about the whole case, it was the anonymous tip he received that helped the Securities and Futures Commission (SFC) to launch an investigation into PCCW's privatisation move. Webb is reluctant to talk about the source of the tip, beyond saying that he would like to keep his sources secret, like any self-respecting journalist.

He immediately alerted the SFC and the Independent Commission Against Corruption about the abnormal share transfers after the offer was made public earlier in the year. He asked the regulator to look at the company's record to check on shareholders, as he himself did before giving his findings to the SFC.

The SFC took the baton from there and its legal team worked overtime to argue the case that derailed the telecom giant's bid.

The judgment of Justice Anthony Rogers was a victory for minority shareholder activism in the city and the local media termed it the battle of David versus Goliath.

Last month, the Court of Appeal denied applications from PCCW and its parent company to make a final appeal against the court ruling that rejected the buyout plan of PCCW's shareholders. . . .Webb says he has never felt threatened as a result of his exposes about companies and feels safe in Hong Kong. "If I was in Jakarta or Manila, I would have felt threatened. But here I have never been threatened or received a threatening call. If I did, I would call the police," he says matter of factly. As a rule, Webb also never comments on companies with questionable shareholdings that may be connected to bad elements. "I would not want to name them, but you can look at the reprimands from the SFC to know these companies."

He is a member of high-IQ society Mensa but says that his busy schedule keeps him away from attending its gatherings regularly. Webb divides his day equally between his shareholder activism and his investment holdings.

He owns shares in all the companies that constitute the Hang Seng Index and uses his shareholdings to raise concerns about any wrongdoing or issue that would hurt minority shareholders' rights.

Webb launched his own website, Webb-site.com, so that he could publicise his views and write on issues that affect shareholders.

"I sort of started blogging long before it became popular. The main purpose of launching my own site was to highlight the issues and get them done."

One of his first causes celebres was to write about the pros and cons of the Hong Kong dollar's peg to the United States dollar.

The peg came under tremendous pressure from currency speculators in 1998 at the peak of the Asian financial crisis, forcing the Hong Kong Monetary Authority to intervene several times in the currency market to shore up the peg.

At the same time, speculators shorted some Hong Kong stocks, spreading panic among retail investors. This forced the government to intervene in the market and buy shares in some blue-chip companies. Webb says the unprecedented government action set a dangerous precedent of intervention in the free-wheeling Hong Kong market